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GUD Holdings Ltd, Australia
Filtration Industry Analyst
January 2007
GUD Holdings Ltd, Australia
COMPANY PROFILE
Profile GUD Holdings Limited is an Australasian manufacturing and marketing company operating in a number of consumer and industrial markets. Its business segments include the Automotive Products unit that encompasses Ryco, Cooper and Wesfil air, oil and fuel filters and Goss replacement fuel pumps. It also has a Water Products division whose products include Steriflo and Filterpure water treatment systems, as well as pumps and other systems. Its other two business units are Consumer Products and Security Products. Analysis GUD Holdings posted solid revenue growth in fiscal 2006, despite continuing tough economic conditions in its core consumer markets in Australasia. Sales increased 17% to reach A$462.4 million, while net profit before tax was up 30% to A$56.9 million. GUD Holdings filter interests are concentrated primarily in its Automotive Products division that reported slightly improved profitability in 2005/06, despite revenue declining by 10% from the prior year to A$70.4 million. The division’s profit improvement flowed from the prior year’s restructuring of Ryco Australia that involved the cessation of Australian filter manufacturing, and occurred despite price pressures reflecting increases in the costs of tinplate and steel used in the manufacture of oil filters in particular. The decline in sales revenue was due to the completion of low-margin motor company contracts following the factory closure and market conditions in automotive after-markets in both Australia and New Zealand. GUD Holding also has some filter interests in its Water Products segment, which saw strong revenue growth of 11% compared to the previous year to reach A$96.7 million. The sales growth came in part from a full year contribution from Contamination Control, acquired in April 2005. The acquisition has seen the Steriflo and Filterpure ranges very successfully marketed through GUD Holding’s extensive Davey’s dealer network, complementing its pump and water pressure system sales in household water supply applications.
COMMENT With a large portfolio of consumer and trade brands, GUD Holdings strategy revolves around ensuring each of its businesses remain cost-competitive in its industry. This requires active management of ‘make or buy’ decisions and, where necessary, the accompanying restructuring programmes. It was this philosophy that saw the company cease the manufacture of automotive filters in Australia in early calendar 2005.In 2006, GUD saw the benefits of this decision with its automotive division improving profitability despite a decline in revenue. Its Ryco filter business focused on consolidating the gains from the prior year restructuring and on seeking new revenue streams. With regards to the latter, the business identified an emerging market segment for cabin air filters, launching a product range in early 2006. This range broadening activity represented Ryco’s first diversification away from its standard oil, air and fuel filters for automotive engines for many years. In Australia, Ryco was also successful in broadening its customer base through new supply agreements with the Big W supermarkets and the Shell service station chain. Future plans for Ryco will see a continuation of this pattern of targeted sales and marketing programmes, as well as appropriate product line extensions. In the Water Products division, recent acquisitions have seen the segment develop three distinct segments, namely domestic and rural water supply and treatment, spa baths and spa pools; and swimming pools. Steriflo and Filterpure will play an active role in the continuing development of the first of these markets. ■
Key Figures (A$ million) GUD Holdings Sales Revenue
Year ended 30.6 2006
2005
2004
2003
2002
462.4
394.4
393.8
372.4
365.9
Trading EBITA* Of Which: Automotive Products Water Products
68.2
62.8
67.1
47.5
37.8
17.9 14.3
17.7 11.3
18.8 8.6
15.4 7.7
13.2 5.9
Net Profit before Tax
56.9
43.7
51.3
33.6
9.1
Net Profit after Tax
40.2
30.4
35.5
21.8
6.4
*Earnings before Interest, Taxes and Amortization
Contact Details Managing Director: Chairman: Address:
10
Ian Campbell Clive Hall 245 Sunshine Road Tottenham Victoria 3012 Australia
Tel: +61 3 9243 3333 Fax: +61 3 9243 3300 Web: www.gud.com.au
January 2007
GUD Holdings Ltd, Australia
COMPANY PROFILE
Profile GUD Holdings Limited is an Australasian manufacturing and marketing company operating in a number of consumer and industrial markets. Its business segments include the Automotive Products unit that encompasses Ryco, Cooper and Wesfil air, oil and fuel filters and Goss replacement fuel pumps. It also has a Water Products division whose products include Steriflo and Filterpure water treatment systems, as well as pumps and other systems. Its other two business units are Consumer Products and Security Products. Analysis GUD Holdings posted solid revenue growth in fiscal 2006, despite continuing tough economic conditions in its core consumer markets in Australasia. Sales increased 17% to reach A$462.4 million, while net profit before tax was up 30% to A$56.9 million. GUD Holdings filter interests are concentrated primarily in its Automotive Products division that reported slightly improved profitability in 2005/06, despite revenue declining by 10% from the prior year to A$70.4 million. The division’s profit improvement flowed from the prior year’s restructuring of Ryco Australia that involved the cessation of Australian filter manufacturing, and occurred despite price pressures reflecting increases in the costs of tinplate and steel used in the manufacture of oil filters in particular. The decline in sales revenue was due to the completion of low-margin motor company contracts following the factory closure and market conditions in automotive after-markets in both Australia and New Zealand. GUD Holding also has some filter interests in its Water Products segment, which saw strong revenue growth of 11% compared to the previous year to reach A$96.7 million. The sales growth came in part from a full year contribution from Contamination Control, acquired in April 2005. The acquisition has seen the Steriflo and Filterpure ranges very successfully marketed through GUD Holding’s extensive Davey’s dealer network, complementing its pump and water pressure system sales in household water supply applications.
COMMENT With a large portfolio of consumer and trade brands, GUD Holdings strategy revolves around ensuring each of its businesses remain cost-competitive in its industry. This requires active management of ‘make or buy’ decisions and, where necessary, the accompanying restructuring programmes. It was this philosophy that saw the company cease the manufacture of automotive filters in Australia in early calendar 2005.In 2006, GUD saw the benefits of this decision with its automotive division improving profitability despite a decline in revenue. Its Ryco filter business focused on consolidating the gains from the prior year restructuring and on seeking new revenue streams. With regards to the latter, the business identified an emerging market segment for cabin air filters, launching a product range in early 2006. This range broadening activity represented Ryco’s first diversification away from its standard oil, air and fuel filters for automotive engines for many years. In Australia, Ryco was also successful in broadening its customer base through new supply agreements with the Big W supermarkets and the Shell service station chain. Future plans for Ryco will see a continuation of this pattern of targeted sales and marketing programmes, as well as appropriate product line extensions. In the Water Products division, recent acquisitions have seen the segment develop three distinct segments, namely domestic and rural water supply and treatment, spa baths and spa pools; and swimming pools. Steriflo and Filterpure will play an active role in the continuing development of the first of these markets. ■
Key Figures (A$ million) GUD Holdings Sales Revenue
Year ended 30.6 2006
2005
2004
2003
2002
462.4
394.4
393.8
372.4
365.9
Trading EBITA* Of Which: Automotive Products Water Products
68.2
62.8
67.1
47.5
37.8
17.9 14.3
17.7 11.3
18.8 8.6
15.4 7.7
13.2 5.9
Net Profit before Tax
56.9
43.7
51.3
33.6
9.1
Net Profit after Tax
40.2
30.4
35.5
21.8
6.4
*Earnings before Interest, Taxes and Amortization
Contact Details Managing Director: Chairman: Address:
10
Ian Campbell Clive Hall 245 Sunshine Road Tottenham Victoria 3012 Australia
Tel: +61 3 9243 3333 Fax: +61 3 9243 3300 Web: www.gud.com.au